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Geopolitics

R&D And Innovation, A Patent Failure In Latin America

In spite of dynamic consumer figures, Latin America lags when it comes to investment in research and development, those crucial agents of social and economic development.

Tech Cocktail conference in Buenos Aires
Tech Cocktail conference in Buenos Aires
Georgy Llorens

-Analysis-

SANTIAGO — The official registration of intellectual property is fundamental for innovation, because it offers a guarantee for innovators that they can, at least for a while, protect their inventions, brands or designs. It is a reward for developing something new.

Analyzing the data on intellectual property registration is interesting, since every patent can conceivably becomes a product, service or brand; looking at today's intangible information helps anticipate tomorrow's actual innovations on the market.

The World Intellectual Property Organization (WIPO) publishes its main statistics on Intellectual Property (IP) annually. Its IP Facts and Figures 2016 had some telling comparative information on Asia and Latin America. Four big IP categories are analyzed every year: the numbers of patents, brands, designs and utility models, which are similar to patents but are less strict and offer protection for a shorter period.

Nearly 2.9 million patents were issued worldwide in 2016, which is 207,900 more than the previous year, representing a 7.9% increase.

While globally the growth is encouraging, a closer look shows that China registered the most patents, with 38.1% of the world total, ahead of the United States, which had 20.4% of registrations, Japan with 11%, South Korea with 7.4% and Europe with 5.5%.

For the entire region of Latin America, the 20 countries south of the U.S. border, including Mexico and Brazil, there was a total of 2.2% of all registrations, or 62,403 of the 2,888,800 patents issued last year. Of these, 77% came from Brazil and Mexico, leaving the 18 remaining states with 0.49% of last year's patent registrations worldwide.

These numbers show that Latin America remains very far from transforming innovation into a pillar of social development, and sadly, this is not likely to change in the near future. With so few patent registrations, very few of the products and services to reach the market in the coming years will be Latin American.

Member countries of the Organization of Economic Cooperation and Development (OECD) invest an average of 2.4% of their gross domestic product in research and development. The biggest pro capita investor is South Korea with 4.3% of its annual GDP spent on R&D, followed by Israel, with 4.1%, and Japan, with 3.6%. The two Latin American OECD members are at the bottom of the list: Mexico is second to last, with 0.5% and Chile is last, with 0.38%.

The Latin American country that spends the largest portion of its GDP chunk on R&D is Brazil, with 1.2%. None of the other countries in the region invest more than 0.5%. This, to say the least, is not promising for the region's future.

Also, in OECD countries, 70% of investment in innovation comes from companies, while in Latin America, only 40% of companies invest in innovation.

A first step toward changing this would be to encourage universities and companies to work together on R&D, by offering tax incentives, competitive funding, rights protections and training to produce flexible professionals with necessary skills.

It can't all be left to the private sector

It can't all be left to the private sector, since investing in R&D has its risks and can affect short-term profits. Executives who are evaluated based on their annual performance might be reluctant to invest in research, even if they know its medium-term benefits.

The region's great challenge is to allocate more resources for investment in R&D, to steer more professionals in the direction of innovation, and then to protect their inventions through patent registration.

States should encourage more people to pursue careers in the sciences, humanities and creative sector. Unfortunately, at least in Latin America, a large proportion of students choose management courses, which focus mainly on increasing efficiency, but do not generate innovations. We need more people to create and research.

From a macroeconomic point of view, this is like a large value chain, which would give our countries new products and services. The chain includes creativity, but also the mechanisms to finance, develop and protect innovations, and carry them forth onto global markets.

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